For Arbor Photonics, a Myriad of Reasons Not to Flee to the Coasts

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When Phillip Amaya, CEO of Arbor Photonics, was first brought in to head up the advanced laser processing company, he said he had every intention of locating the start up in California. But Michigan’s aggressive approach to home-growing businesses and keeping them in the state changed Amaya’s mind.

“The state came through to help us out,” Amaya says of his decision to keep the company in Ann Arbor. “Their programs accomplished what they were intended to do.”

According to Amaya, because the company—which designs high-powered fiber optic lasers that are used to manufacture everything from microelectronics to defense equipment—isn’t in the “sweet spot” for most venture capital firms obtaining funding has been a challenge. “There’s a lot of firms that have scars from the telecom bubble where they invested in companies that had fiber optics or lasers in their names,” he says.

But the state’s economic development approach has helped to fill in the gap. Arbor Photonics has secured $2 million in funding from the Michigan through state-sponsored economic development competitions and other programs. Amaya added that he admires Michigan’s strategy for economic development, which focuses on developing businesses in the state and encouraging them to stay there instead of just incentivizing companies across the country to relocate.

And the approach seems to be working, Amaya says. He added that since the company’s founding in 2007 other startups as well as organizations such as Ann Arbor SPARK have provided Arbor Photonics with advice and even helped the company find its current location.

“Between the University (of Michigan), state economic development programs, and local VCs, it’s a very supportive environment for starting a business,” he says.

So far the company has raised $4.7 million, including the $2 million in state funding, and it plans to start shipping its products by the end of the first quarter of this year. According to Amaya, the company expects to make $30 to $35 million in sales by 2015 off of the technology that was originally developed by Almantas Galvanauskas, a professor of electrical engineering at U-M and VP of the company.

From the outside, Arbor Photonics’ headquarters—a few-room office and lab space tucked away in a nondescript industrial park in Ann Arbor—doesn’t seem like much, but … Next Page »